European shares extend September losses

Financials decline; Alcatel-Lucent, RHJ Investments also lower

By

SarahTurner

LONDON (MarketWatch) -- European shares on Wednesday continued a September pullback, closing down for a third straight session, with financials among the worst performers as investors took some recent profits off the table.

The pan-European Dow Jones Stoxx 600 index (SXXP) declined 0.5% to 230.49. The index ended with a 1.8% loss on Tuesday, the first day of September and the second consecutive day of losses.

"Equities in the short term probably need to breathe. There has been an astonishing bounce since March," said Alain Bokobza, head of European strategy at Societe Generale referring to a 48% bounce for stocks from March.

"Technically they might be overheated but fundamentally equity markets are backed by a need for reallocation out of cash and they will also have less competition [from bonds]," he said. Read ECB preview.

"If there were to be some correction in equities I would use this as an opportunity to reinvest my cash," he said.

Historically, September has been the trickiest month for investors, so the retreat isn't a surprise, said Ian Williams, strategist at Altium Securities in London.

The losses carried over to regional equity markets as well. The German DAX index (1876534) lost 0.1% to 5,319.84, the French CAC-40 index (PX1) declined 0.3% to 3,573.13 and the U.K. FTSE 100 index (UKX) ended virtually unchanged at 4,817.55,

In Spain, where unemployment rose in August, the Ibex 35 index (IBEX) fell 1.6% to 10,991.1

U.S stocks were lower in early trading after employment in the U.S. private sector fell by a steeper-than-expected 298,000 in August, according to the ADP employment report. But they turned higher later in the morning. See full story.

Banks and insurers, which have rallied sharply since March as investors hoped for improving economic data, fell on Wednesday in Europe, with Santander (SAN)
STD, +0.29%
falling 3% in Madrid and Allianz (ALV)
AZ, +0.48%
shares down 1.9% in Frankfurt.

"A wider recovery than expected in the short term should not lead to the conclusion that the long term economic cycle will be better than expected. Deleveraging will prevent economic growth from being very high for very long," said Bokobza at Societe Generale.

Alcatel-Lucent to offer bond

Shares of telecom equipment group Alcatel-Lucent (ALU)
ALU, -1.71%
fell 7.3% after it said that it's offering a convertible bond maturing in 2015 worth up to 1 billion euros.

Also on the downside, shares of shipping firm A.P. Moller-Maersk fell 8.1% to 33,900 kroner in Copenhagen after it said it's going to sell up to 250,340 treasury B shares, representing approximately 5.7% of its total share capital, to both new and existing institutional investors.

At Tuesday's closing price of 36,900 kroner per B share, the value of the placing shares would be up to 9.2 billion Danish kroner ($1.76 billion). See full story.

RHJ (RHJI) shares fell 2.5% after the Belgium investment firm raised its offer for a stake in General Motors' European car unit, Opel, to 300 million euros, from a previous level of 275 million euros, according to reports.

Oil firms were the only sector in the green on Wednesday, with BP (BP)
BP, -1.72%
shares up 4.2% after it touted a "giant" discovery.

At the Tiber prospect in deepwater Gulf of Mexico, BP said it drilled to a total depth of approximately 35,055 feet and found oil. The prospect is located 250 miles southeast of Houston in 4,132 feet of water. See full story.

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